Crestwood taxpayers spend $1 million on legal bills to defend village leaders

Criminal and civil investigations in contaminated water case rack up legal fees

February 14, 2010|By Michael Hawthorne, Tribune reporter

Crestwood taxpayers paid lawyers more than $1 million last year to defend village leaders accused of pumping contaminated water to residents for at least two decades.

Hiring Loop law firms that specialize in white-collar criminal and civil defense cost the beleaguered southwest suburb seven times as much as it typically spends on legal fees for routine municipal work, according to records obtained by the Tribune under the Freedom of Information Act.

Crestwood went from lawyers who charge $180 an hour to others who command $500 an hour. With a population of about 11,000 and an annual budget of just $14.5 million, the village's escalating legal costs already have led officials to scrap property tax rebates doled out to residents for more than a decade.

And the meter still is running.

The most expensive bills so far came from Jenner & Block, a Chicago firm hired exclusively to represent former Mayor Chester Stranczek, whose penny-pinching management style once led the National Enquirer to declare Crestwood the "best run town in America."

Crestwood paid the firm nearly $303,000 last year. Lawyers recently were in court arguing that Stranczek, who retired in 2007 after nearly four decades in office, suffers from dementia and isn't capable of testifying.

Other firms hired by the village have represented former Illinois Gov. Rod Blagojevich, who has been indicted on federal corruption charges, and his imprisoned fundraiser, Antoin "Tony" Rezko. The roster also includes lawyers for the politically connected Duff family, accused of operating phony women- and minority-owned businesses vying for city work, and former Chicago Sun-Times Publisher F. David Radler, convicted of fraud for fleecing the tabloid's parent company.

Village leaders moved to hire some of Chicago's top law firms after the Tribune revealed last April that Crestwood secretly drew water from a contaminated well for 22 years, apparently to save money. The village kept piping polluted water to residents, records show, even though state environmental officials told Crestwood in the mid-1980s that cancer-causing chemicals related to a toxic dry-cleaning solvent had oozed into the well.

Crestwood, along with Stranczek, his son, Robert, the current mayor, and the village's top water official face nine civil lawsuits related to the water scandal, six of which have been merged into one case. The suits, filed on behalf of current and former Crestwood residents, seek compensation for pain and suffering.

The U.S. Environmental Protection Agency and U.S. Attorney Patrick Fitzgerald's office are conducting a criminal investigation of the Stranczeks.

State law generally forbids municipal officials from charging taxpayers for legal fees related to criminal acts, though village attorneys are seeking to shield the Stranczeks from liability by arguing they were acting in their official capacity.

"It all depends on whether it's determined they were merely negligent or acting with wanton disregard of the law," said James Knippen, a Wheaton attorney who specializes in municipal law. "But it's not seen as good public policy to indemnify public officials for committing criminal acts."

Knippen's firm filed one of the personal injury suits against Crestwood.

Lawyers also are in court seeking to get Crestwood's insurance companies to reimburse the village for last year's legal expenses and to pay its future legal bills. Those companies have refused to provide coverage for expenses related to the water scandal and have filed their own lawsuits in federal court to ensure the village continues to pay.

In a court filing by the village's largest insurers, Scottsdale Indemnity Co. and National Casualty Co., the companies highlight contract language they contend allows them to deny coverage for the "deliberate violation of any federal, state or local statute, ordinance, rule or regulation committed by or with the knowledge of the insured."

"Right now we are paying the bills and expect to continue paying the bills," said David Sosin, the village's chief attorney. "We're not happy about it, but we have to defend these cases."

Sosin's firm charged the village about $156,000 last year, up from $74,000 the year before. He attributed the extra costs to the firm's work coordinating Crestwood's legal defense in the water case.

Village officials are tight-lipped about their legal bills. Mayor Robert Stranczek sent a letter in October notifying homeowners they no longer would be getting property tax rebates. He blamed the slumping economy but also noted the village's mounting legal expenses.

"It bothers me that there is a seemingly limitless fund to support an ex-mayor's legal battles, as well as an office that has admitted using a contaminated well for many years," said Theresa Flynn, who built a house in Crestwood 13 years ago. "This isn't the vision of Crestwood I had when I moved here."